A stake buy buzz around Hinduja Group owned private sector lender IndusInd Bank received little response from investors as the COVID-19 influenced provisioning overhang continues to weigh.
Nippon Life, Japan’s largest life insurer by revenue, has begun discussions with the Hinduja family-backed IndusInd Bank to explore a strategic investment in the private lender, which is battling bad loans and a potential ratings downgrade.
Although, the details about fundraising are still awaiting but it is much needed activity to build war chest in the
current turbulent times. It’s a win-win situation for both.
Buying into a bank will help Nippon get a much-needed bancassurance partner for distributing its insurance products and secure big corporate treasury money for its asset management business in India, these people said. An investment from a foreign player with deep pocket will also solve the bank’s capital issue for now.
IndusInd Bank has reported a Gross Non Performing Assets (Gross NPAs) of Rs 5146.74 Crore (.00 % of total assets) and Net Non Performing Assets (Net NPAs) of Rs 1886.58 Crore (.00% of total assets).
The lender key revenue stream include Interest & Discount on Advances & Bills which contributed Rs 18256.68 Crore to Sales Value (82.01 % of Total Sales), Income From Investment which contributed Rs 3677.34 Crore to Sales Value (16.51 % of Total Sales) and Interest which contributed Rs 225.10 Crore to Sales Value (1.01 % of Total Sales) for the year ending 31-Mar-2019.
It quoted a price-to-earnings ratio of 6.83 and price to book value of 0.99 .
IndusInd Bank’s share price crashed 69% between March and early April, due to the fragile capital adequacy ratio. Global brokerages, Morgan Stanley and Citi advocated raising $500-750 million “confidence capital” from private investors.
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